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Peru - Banking
Notes are issued in 10, 20 50, 100 and 200 sols, whilst coins are available as 1, 2 and 5 sols, and 1, 5, 10, 20 and 50 cents.
There is a big problem with counterfeit money in Peru. Design software, bonded paper, watermarks, intricate typography, security strips and several different types of ink are used by criminals to create millions of fake notes, including US $100 dollar notes. Some are for the domestic market, but most is sent abroad. The problem is so bad that the US security services set up long-term operations in Lima in 2013. There are plenty of remote locations available for counterfeit gangs to keep their noisy machinery running all night. Master counterfeiter Joel Quispe is even alleged to run his counterfeit operations from a prison cell, with the help of his family on the outside. Many shops and pharmacies keep hole punchers by the till, which they use to punch holes in counterfeit notes.
Tourists and newly-arrived expats will have problems identifying counterfeit money because they won’t be familiar with the look and feel of the currency. If in doubt, reject a coin or note and ask for another one, even if you are in the bank. If you are given a forged or damaged note or coin, it will be rejected when you later try to spend it.
ATM machines are widely available in cities and big towns, especially at bank branches and in modern shopping centres. The Cirrus and Maestro signs mean that your card will be accepted, although you may be charged to use the card, especially if the ATM belongs to a different bank. The card fee should be clearly displayed on the screen before the transaction is confirmed and finalized. Check that the machine does not have any alien devices on it which allow criminals to clone your card. You will be asked to enter your PIN code; make sure no one can see you do this.
Carrying large amounts of cash is a bad idea because of the high risk of petty theft. Some bus routes are targeted by armed gangs, but most people who have their wallets and bags stolen will be the victims of distraction techniques. A stranger drops coins all over the floor near you and you join the group helping to pick them up, or a group of people helpfully try to clear mud off your clothes, and the next thing you realise your wallet or bag has gone. Even if people nearby have seen exactly what happened, they may not shout out or alert you. If your credit card is stolen, try to get it cancelled before it is used.
If you need to carry large amounts of cash, keep a little in a purse or wallet and the rest in a concealed holder under your shirt. Keep your wallet in your front pocket, as back pockets are much easier to steal from.
If you pay by credit card, you may be asked if you are paying by Mastercard or Visa, as some businesses have different machines for the different types of card. Never let your card out of your sight; the machine should be brought to you, or you can walk across to the machine. You will then be required to enter your PIN. If you are visiting from the US and don’t have a PIN, you will be asked to provide a signature and show the staff your passport. Make sure you keep the receipt and check it on your statement.
If you are going to live in Peru for any length of time and earn an income there, you will need to open a local bank account. The financial, insurance and pensions sector is well-developed, and now accounts for 3.8 percent of the country’s Gross Domestic Product (GDP). Bank branches are available in all cities and most towns. However, if you are living in a remote area, you may find your nearest bank is quite a distance away. If you bank with an international organization, they may agree to set up an account for you in Peru before you leave home.
If there are a number of bank branches available in your new area, compare the terms and conditions associated with the bank account. Many ask for a minimum balance to be maintained at all times; a fee could be applied if you fail to do this. Charges for services are normal and the rates vary, so some bank accounts will work cheaper for you than others. Government taxes are also applied to bank charges.
You will need to prove your identification and right to live in the country when opening the bank account. Citizens will use their DNI, and expats will be asked for their carné de extrajería, or foreign resident card. Passports do not confirm your legal right to stay in the country beyond the initial visitor’s stamp from when you entered Peru.
You will also be asked to provide an original copy of a recent utility bill, as proof of your address. The bank will want to know how much your income is and where it comes from, as a way to identify potential money launderers and to ensure you are a reasonable credit risk for the bank. Providing your contract of employment or pension statements will normally be adequate for this.
Whilst you will find English speaking bank staff in many city bank branches, any application forms and contracts that you sign will be in Spanish. Make sure you have a friend to translate, or have had a detailed discussion with the bank personnel. You cannot later claim not to have understood a contract you signed.
Paying bills by direct debit is normal, but each transaction will have a charge attached if this was set out in the contract you signed when opening the bank account.
If you wish to put some money in a Peruvian savings account, the same identity, residence and income tests as you took for your current account should be carried out, unless you have an existing account with the bank you are applying to. The interest rate on your savings will be set out in writing, although if this is a variable rate account then the amount you receive will vary. If the account has a fixed rate of interest, you may be also required to keep the funds in the account for a set time limit. If funds are withdrawn early, the amount of interest paid will be significantly reduced. The amount of notice you must give to withdraw funds will depend on the terms and conditions of the individual account, as set out in the contract.
It is possible to obtain loans and overdrafts from banks in Peru. However, these are generally given to people with good financial track records, and if you have only just arrived in the country, you won’t have one yet! Once you are well-established, your request will be considered carefully. Interest rates will be advertised, but they are generally applied on an individual basis, assessed against the applicant’s circumstances and level of risk.
If you violate the terms and conditions of your account, or go into an unauthorized bank overdraft, the bank has the right to impose charges in accordance with the contract you signed and to freeze or close your account.
Increasingly, online bank services allow you to maintain your bank account from home. There will be a number of security measures to keep the account safe. However, a good starting point is to never believe anyone who rings claiming to be from your bank. Tell the person ringing that you will call them back, then ring your bank from a different phone. Ring a number advertised on your bank card. If it was a genuine call, the bank will have your details on screen. If the call had been from scammers, you will have protected your money from theft.
The Peruvian tax year is in line with the calendar year. If you become resident in Peru and spend more than 183 days of a calendar year in the country, you will be due a tax bill the following year. You have three months beyond the end of the year to submit your tax return, or you will be fined. Married couples may submit a joint return.
If you are self-employed in Peru, or you do not have the tax deducted from source on all your income, you will have to complete annual tax returns. If your only source of income is the wage from your employer, it is likely that they will deduct the tax and pay it over on your behalf. Check your wage slips carefully each time you are paid.
Residents and non-residents are charged different amounts for earnings and capital gains tax, with much higher costs for non-residents. There are no inheritance taxes to pay. If you are in any doubt as to your tax position, the services of a reputable tax advisor will become a good investment.
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